Cash back complaints prompt Commerce Commission probe

Cash back complaints prompt Commerce Commission probe

The Commerce Commission is investigating two potential breaches of the Fair Trading Act as a result of consumer complaints over cash back offers on notebook PC sales. The investigations follow its stern warning last week to retailers it says are “pushing the boundaries” when using the marketing method.

The Commission’s director of fair trading, Adrian Sparrow, says it can’t name companies involved while investigations are underway, but says the potential penalty for a breach is a $200,000 fine for a company and $60,000 for an individual.

“Since we made the warning we’ve had a couple [of complaints] we are investigating quite seriously now. They’re in computer retailing, around the PC/laptop area.”

Sparrow says the commission has had between 40 and 50 complaints concerning cash back offers in the past six months, and in the earlier warning it urged potential PC and printer buyers to be cautious of cash back offers.

In the warning the Commission stated: “We can see a pattern developing in computer retail where consumers are enticed by cash back offers but then find that the terms and conditions of the offer force them to jump through hoops and wait months to receive the full cash back amount. Consumers, influenced by the advertised cash back offers, appear to believe the redemption process will be a relatively simple one, which is often not the case.”

Sparrow says consumers “just weren’t aware of what they were getting themselves into” and that they often believed they would have their cash back within a week.

He says retailers need to be honest with customers, while consumers need to make sure they get all the information.

“It would be a lot easier if retailers were up front and say it might take three months to get the cash back, and that there are quite a number of forms to fill in. People are then more able to take an informed decision and live with the consequence.

“There’s also an onus on the consumer to find out more and ask some hard questions. The message for consumers is ask how much, when and what do I have to do to get [the cash back].”

The number of complaints over cash backs in computer retailing reflects the popularity of the practice in that sector at present, Sparrow says.

Read Reseller News' special report on vendors' and a retailer's reponse to the Commission's warning on cash backs here.

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